Background, Plans and VisionWybren Vlaskamp & Hans-Jürgen Koot

Reducing Shrink on Hot Products

A Shared Responsibility

ECR WorkshopBrussels, 18th May 2010

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Table of Contents

• Shrink Approach Step by Step• Data Analysis• Hot Products• Supplier Involvement• Win Win• Results

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AS Watson Shrink ReductionStarting point >> ECR Roadmap

* All activities cataloged* Process planned

* One single definition for shrink

* Stores and products identified and prioritized

* Short – Mid and Long term Solutions identified* Exchange of beste practices

* Solutions implemented by interdisciplinary teams* All costs and benefits tracked

* Results evaluated for succes

Map

Measure

DevelopSolutions

Analyze

Implement

Evaluation

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Shrink ReductionProcess

ManagementCommitment

Shrink Data AnalysisStaff

Supply ChainAnalysis

Toolkitper

Formula

Step 1

Step 5

Step 3

Step 2

Step 4

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SUPPLY CHAIN ANALYSIS

To reduce shrinkage you need to know what to do and where.

Analysis of the Supply Chain is key in this to identify all Shrink Risks from Manufacturer to Customer.

To find these RISKS all processes were analysed:

- Transport - Logistics- Store Operations- Finance

Next we decided what to improve on the short-, mid- and long term with regard to:

Staff - Stores - Logistics - Products - Information

Step 2

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Shrink ReductionProcess

Staff

Logistics

Product Stores

Information

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ANALYSIS of SHRINK DATA

This was key in taking the right decisions, prioritising activities and havequick wins which show the effectiveness of all of this.

- defining the “Hot Stores”- defining and protecting “Hot Products”- reducing stock- discussions with suppliers- making the right decisions- investing in equipment

Step 3

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HOT STORES

Defining the “HOT STORES”

- Loss making- High Shrink- High Stock- Red - Amber - Green criteria- Assortment- Displays / Promotions

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HOT PRODUCTS

Defining the “HOT PRODUCTS”

- By reason, store, supplier- By category, reporting- and familygroup and by product- High Shrink (not only % but also value)- Reduction per facing / reference- Assortment in Red stores - No Displays with Hot Products in Red stores- Orderpicking in secured area DC- Protected in secured totes- Received and counted in stores- Stored in secured area

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SUPPLIER INVOLVEMENT

Discussions with our “hot” suppliers:

- Cosmetics- Skin Care - Health Care

• Source tagging• Blister pack• Wrap and tag• Reducing stock in presentations• Displays / Promotions• Funding tools• Shrinkage fee

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JOINT RESPONSIBILITY

• Patently shrink reduction is only possible by a collective approach (manufacturer/supplier - retailer) and handled as a joint problem.

• Patently shrink reduction is only possible by taking more initiatives at the same time (tagging, packaging, training staff,installing CCTV, incentives shop managers, stock reduction (shelves / stockroom), clear shoppolicy, follow up shoplifting, etc.)

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JOINT RESPONSIBILITY

• “Map & Measure” to measure results (improvements, succes)

• “Map & Measure”. As discussed earlier it is important to knowwhat your “hot products” are. Not always because of price but because of marketability (theft sensability) Detailed analysis is key to avoid focussing on the wrong products.

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L’OREAL / MAYBELLINE

Together with L’Oreal we discussed reduction of shrink in our Cosmetics and Skin Care products:

- L’Oreal- Maybelline - Garnier- Dermo Expertise

• Protection of Mascara’s in blisterpack• Protection of Cosmetics > €. 9,95 • Wrap and tag• Sourcetagging• Limited stock in presentations• Displays / Promotions• Funding tools• Shrinkage fee

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Win Win

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Win Win

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RESULTS

Shrink reduction > 45%

Cosmetics > 45%Mascara’s > 75%

Sales uplift > 25%

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Questions ?